The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone (Bantam, 2013)

... Bezos told the Washington Post (before he bought it) that ‘to be nine times bigger than your nearest competitor, you actually only have to be 10 per cent better.’ And his site was better, though by how much who could say? In 1999, when Toys ’R’ Us launched its website in time for Christmas, Amazon bought out its entire stock of the most popular toys (taking advantage of a free shipping promotion), and resold them on its own site. Toys ’R’ Us was fined by the Federal Trade Commission for over-promising. A department within Amazon called Competitive Intelligence noticed that a New Jersey company called Quidsi was having success with a site called Diapers.com: it sold nappies at a loss to entice customers to buy its other baby products. Amazon tried to acquire the company, but Quidsi wasn’t interested. So Amazon started selling its nappies for even less than Quidsi, though it meant losing $1 million a day. When Quidsi still wouldn’t sell, Amazon threatened to start giving away nappies. Quidsi sold to Amazon; nappy prices went back up. To make Amazon’s catalogue deeper than barnesandnoble.com, it bought up stock from used book dealers, then started letting the dealers sell their stock on Amazon’s site for a fee. Publishers didn’t like their new books competing with cheaper versions of the same titles, but Amazon made money either way. In addition to selling products from their own warehouses, they would become the biggest middleman of the internet: more than two million registered ‘marketplace sellers’ pay Amazon fees and commissions to have their products listed on the site, or pay Amazon to warehouse and ship their products for them. There are blogs that keep track of the more unlikely items: tanks, wolf urine, simulation models for infant circumcision, uranium ore, live ladybirds, Zimbabwean trillion dollar banknotes. Type in ‘dog Halloween costume’, and you’ll see thousands. The more different things the site sold, the more people used the site, the more businesses would pay to have their products listed on the site. Customers were a commodity like anything else.

But it was losing out on music. Apple had taken control of the digital music market while Amazon kept pushing CDs. They wouldn’t allow the same thing to happen to books. Hence: the Kindle. ‘Your job is to kill your own business,’ Bezos told the engineer in charge. ‘I want you to proceed as if your goal is to put everyone selling physical books out of a job.’ He was convinced that Apple had made the iPhone too profitable: the smartphone market became glutted with cheaper competitors. Instead Amazon would lose money when people bought the Kindle, but make money when they used it – by buying e-books from Amazon. ‘Publishers that didn’t digitise enough of their catalogues, or didn’t do it fast enough, were told they faced losing prominence in Amazon’s search results or in its recommendations to customers.’ Amazon’s plan to charge only $9.99 for e-books frightened publishers, who knew it would cut into their hardback sales. When five major US publishers attempted to create an electronic bookstore with Apple, Amazon complained to the US Department of Justice, arguing that the publishers were conspiring to raise prices for electronic books in violation of antitrust law. The publishers paid at least $164 million to make the charges go away; they also gave up their bookstore.

Stone has covered Amazon almost since its creation, first for Newsweek, now for Bloomberg Businessweek. He admires it because it’s good at giving us what we want, which is why he thinks we should fear it; and he thinks it will ‘expand until either Jeff Bezos exits the scene or no one is left to stand in his way’. In the few months since Stone’s book went to press, Amazon has bought eight million square feet of warehouse space and taken on 70,000 temporary American workers for the Christmas rush; launched Amazon India and a Kindle store in Mexico; unveiled a new tablet; started the largest website for the sale of fine art; begun selling groceries throughout Los Angeles (other markets to be announced); and made an unprecedented deal with the US Postal Service to have customer deliveries on Sundays. London is to get Sunday deliveries too, via Amazon’s own trucks. The company is also preparing to launch its own smartphone (possibly with ‘eye-tracking’ software: no clicks necessary, just blink) and is manufacturing a box that will let users access Amazon content through their televisions. All this in addition to building up its own publishing house, television and film studio, and continuing its dominance over the sale of server space for tech companies.

The Everything Store is listed for sale on Amazon. MacKenzie Bezos, Jeff Bezos’s wife, has reviewed it on the site: one star out of five because she doesn’t think it’s accurate. Shel Kaphan, Amazon’s first employee, also reviewed it – four stars – and says that it is, ‘by and large’. You can buy it new in hardback at 46 per cent off list price; or cheaper used; or even cheaper on Kindle. You can also listen to it through Amazon’s company Audible.com – for free if you’ve never tried Audible.com before. Shipping is free if you’re willing to buy something else too, and they’re betting you will.

I'm wrapping Christmas presents, and almost everything came from Amazon and has been for years. I hate to shop, and do not miss slogging around malls where the same overpriced crap is offered by every retailer.

It demonstrates what can happen if one concentrates on a well-visualized goal and focuses action towards achieving it.

“Christ has no body now but yours. Yours are the eyes through which he looks with compassion on this world. Yours are the feet with which he walks among His people to do good. Yours are the hands through which he blesses His creation.”

This ignores that Amazon has a lot of huge competitors with a world of resources (WalMart, Best Buy, Target) who have crappy websites and get their @$$es kicked by Bezos for no good reason. The diaper stories are irrelevant, that's been going on for centuries and we still have plenty of small businesses (except the ones obama is trying to destroy).

Mr. Perfect wrote:This ignores that Amazon has a lot of huge competitors with a world of resources (WalMart, Best Buy, Target) who have crappy websites and get their @$$es kicked by Bezos for no good reason. The diaper stories are irrelevant, that's been going on for centuries and we still have plenty of small businesses (except the ones obama is trying to destroy).

Which is just about all of them not owned by friends of the Obama's

The classes and the races to weak to master the new conditions of life must give way {..} They must perish in the revolutionary holocaust --Karl Marx

Bezos, who has grown his humble, money-losing online book shop in 1995 into one of the most powerful economic engines on Earth — selling everything from airplane parts to zebra-print dresses — saw his net worth grow alongside his company. This week, he became the world’s second-richest person, worth $76 billion.

Amazon, which is also in the movie-producing business — it won an Oscar for its "Manchester by the Sea" — is now the fourth-most-valuable company in the United States and employs 341,400 full- and part-time employees.

Amazon will add another 100,000 full-time jobs over the next 18 months, Bezos proudly announced this year.

The new jobs are great, but a closer inspection shows Amazon may simply be adding back jobs it helped kill off.

For example, Amazon played a large role in eliminating more than 50,000 jobs in recent years from just three companies — Staples, Office Depot and Best Buy, public filings show.

In March, MarketWatch estimated that Amazon will destroy 1.5 million retail jobs in the next five years. And with its push into self-driving trucks, drone delivery, automated grocery stores and more, the site said the total number of lost jobs would likely be more than 2 million, concluding, "Could Amazon actually kill more American jobs than China did? It’s quite likely."

[...]

Most of the jobs Amazon creates are low-paying warehouse and customer-service positions. The warehouse jobs pay, on average, $12.32 an hour, 9 percent less than the industry average at other warehouses, according to ILSR, which looked at 1,300 Amazon wage postings on Glassdoor.com.

Recent Amazon ads for customer service reps who work from home show that the company is paying just $10 an hour— or just $2.75 more than the federal minimum wage.

Amazon is spending $13.7 billion to buy Whole Foods, but its damage to the stock market has already been in the tens of billions.

Just among the biggest losers in the retail and food categories in the S&P 500, the market cap destruction for just 20 stocks was $37.7 billion Friday.

Amazon has been an unparalleled disruptor for the retail industry, and the fact it is now turning its focus to groceries has sent a chill through a whole new category. Even the food companies supplying the stores have been slammed.

Cowen analysts say the grocery business breaks down into three categories and Amazon is attacking all three. Perishable food, like meat and milk; non-perishables, like cereal, cereal and pasta, and consumer products, like baby products, dish detergent and shampoo.

The analysts said Amazon will likely be ninth largest retail grocer in 2017, but by 2021, they expect it to be No. 3 three behind Wal-Mart and Kroger.

A cashier-free shopping experience is inevitable and it would be nice to see this happen at Whole Foods, whose lines in Manhattan can take a Whole Afternoon. The writing was on the wall when self-checkout started appearing. It was only a matter of time before someone put an army of computer vision and machine learning PhDs to work on figuring out how to detect items users are removing from store shelves. I distinctly remember coming up with the idea of using optical tracking for this application back in 2010 but obviously I wasn't the first and ideas are worthless until actually implemented anyway.

A lot of people also make money in surprising ways using Amazon. For example, ordering directly from Chinese factories and establishing an Amazon online storefront here in the US. I've seen bartenders able to quit their jobs because they've scaled these kinds of operations to six figure annual incomes on their own.

In any discussion about Amazon's success, their excellent customer service can't be neglected. Mom and pop shops are usually terrible at this. All businesses are happy to take your $$$ and loathe to give them back but mom and pop shops are particularly nasty and ornery about it when they screw up.

The reason why monopolies were broken up in an industrial economy was that they tended to gain control over the platforms through which their products were distributed. The biggest oil company ends up controlling shipping and refineries, the biggest airline controls too many gates, and the biggest phone company controls the wires.

But in a digital economy, the platform is the business. Netflix content sells its platform. Apple’s devices sell its supposed "ecosystem." Amazon’s book business, like Uber’s cab business, was just an easy foothold—the low-hanging fruit of an existing but inefficient marketplace—through which to establish a platform monopoly. From that beachhead, the company then pivots to other verticals.

The problem is, when an existing market is merely a means to another end, the company doesn’t consider the long-term effects of its actions. Amazon treated the book industry the same way companies like Walmart once treated the territories into which they expanded: Use a war chest of capital to undercut prices, put competitors out of business, become the sole employer in the community, turn employees into part-time shift workers, lobby for deregulation, and effectively extract all the value from a given region before closing up shop and moving to the next one.

This model of doing business—one that even a proto-fascist like Henry Ford would have considered obscene—has not served corporations well. As the data now reveals, corporate profits have been steadily decreasing relative to corporate size over the past 75 years. That’s right: Corporations are great at extracting all the value from a marketplace, but really bad at deploying the money they accumulate in the process. They take all the poker chips off the table, leaving nothing for the other players to exchange between themselves. And by sucking their customers and suppliers dry, such companies end up destroying the marketplaces on which they depend for revenue. It’s a form of financial obesity, where the only thing left for the company to do is acquire a new marketplace, extract all its value, and move on.

In the real world, such extraction took years, even decades to run through its cycle. In a digital economy, "network effects"—which is when a product or service’s value increases the more people who use it or work to create it —accelerate the cycle so that an entire taxi industry can be turned into an "internet of things" in a matter of months.

It’s not that internet founders are somehow more evil or rapacious than their forebears. It’s simply that when companies are platforms, survivability and scalability amount to the same thing. Just as winner-takes-all network effects lead to just one Taylor Swift and millions of penniless artists, these same dynamics promote the establishment of platform monopolies like Amazon.

The problem is less that these single platforms emerge than the fact that their business plans are taken from the obsolete play books of the industrial age, where extraction was the only game in town. While internet servers and financial capital can scale up almost infinitely, the real world cannot. Humans only have so much time and attention in a given day, and the topsoil only has so many nutrients in a given acre. As the merchants of abstracted digital products, like ebooks and streaming media, apply their same business models to the markets and environment on which real people depend for sustenance, power-law dynamics become a lot more dangerous.

Not that Whole Foods was ever a sustainable business in itself. Healthy food and sustainable agriculture are simply incompatible with year-round organic summer produce in all 50 states. However catchy the slogan, capitalism really has no room to be conscious. Of the three factors of production—land, labor, and capital—the "consciousness" part of the equation has always been provided by the places and the people.

Which means that if we’re actually going to confront the devastating potential of an Amazon monopoly, we have to come to grips with more than the way one company has seized control of multiple verticals. We must look instead at how we’ve employed our digital platforms solely in the service of an extractive industrial-age model of growth, and decide whether we’re capable of upgrading to a genuinely digital and distributed form of capitalism. This would mean adopting circular, even revenue-based models that sustain our marketplaces—instead of simply colonizing them.

... Jeff Bezos is the richest man on our planet. If there is somebody to hate, it’s got to be him. Do him in, Donald. Skin him. As opposed to North Korea, he is a soft target. A new-rich, a smart kid out of nothing. No old money, no old school ties behind him. Who will support him? The CIA? Cut the CIA budget for the exact amount they pay to Bezos, so the spooks will understand the message.

Go after his advertisers. Kick his reporters out of White House. Ask, no, demand that the FBI to investigate his doings. A rich guy like Bezos has surely committed multiple crimes, no doubt. If the FBI can’t discover his crimes, sack the head of the FBI, and take the one who can. Unleash all the hate you can find upon his head. And when he is be taken to prison, you’ll know: the rest will become more careful with their tongues. And the best: rip him off his ill-gotten gains and use that to provide health care for every American. It should be enough. Probably you could cover all the student loans with the change. And you will be able to proceed with your necessary reforms.

So, Donald, start every day of yours with a great booming call: “Bring me the head of Jeff Bezos”!